Time to put the brakes on the legal costs gravy train that is costing UK consumers £2.7 million every day says the ABI

The high price UK consumers are now paying for excessive legal costs are revealed today by the ABI. Calling for a root and branch reform of Britain’s civil litigation system, the ABI highlights how millions of consumers are losing out as a result of high legal costs involved in dealing with personal injury claims.

In its response to the Ministry of Justice consultation on civil litigation costs, the ABI highlights that:

• Every day UK consumers are paying the legal profession a staggering £2.7 million through their motor insurance premiums.
• An estimated 10% of every motor premium goes to the lawyers – this equates to an extra £41 a year on the cost of every motor insurance policy.
• For every £1 paid in compensation to motor accident victims, an additional 87 pence is paid out in legal costs.

Nick Starling, ABI’s Director of General Insurance and Health, said:

“High legal costs are at the heart of a compensation system that is too slow, too complex and fails too many genuine claimants. Often encouraged by claims management firms, many people believe that there is a compensation culture to exploit.
“Our current system is failing not only many genuine claimants, who often have to wait too long to get the compensation they need, but all consumers who end up paying for it through higher insurance premiums. We now have a real opportunity for much-needed change to deliver faster, fairer, more cost-effective compensation and care to those who need it. This is why we support implementation of all Lord Justice Jackson’s recommendations on reform of civil litigation. This consultation must be the catalyst for change that puts the brakes on the legal costs gravy train.”


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Notes

Notes for Editors

1. Enquiries to:
Liz Forster 020 7216 7444 (Mobile: 07717 578 586)
Malcolm Tarling 020 7216 7410 (Mobile: 07776 147 667)
Erfan Hussain 020 7216 7411 (Mobile: 07712 841 184)
Kelly Ostler-Coyle 020 7216 7415 (Mobile: 07968 364 302)

2. The ABI is the voice of the UK’s insurance, investment and long-term savings industry. It has over 300 members, which together account for around 90% of premiums in the UK domestic market.
The ABI’s role is to:
- Be the voice of the UK insurance industry, leading debate and speaking up for insurers.
- Represent the UK insurance industry to government, regulators and policy makers in the UK, EU and internationally, driving effective public policy and regulation.
- Advocate high standards of customer service within the industry and provide useful information to the public about insurance.
- Promote the benefits of insurance to the government, regulators, policy makers and the public.

The UK insurance industry is the third largest in the world and the largest in Europe. It is a vital part of the UK economy, managing investments amounting to 24% of the UK’s net worth and contributing the fourth highest corporation tax of any sector. Employing over 275,000 people in the UK alone, the insurance industry is also one of this country’s major exporters, with a fifth of its net premium income coming from overseas business.
Insurance and businesses protect themselves against the everyday risks they face, enabling people to own their own homes, travel overseas, provide for a financially secure future and run businesses. Insurance underpins a healthy and prosperous society, enabling businesses and individuals to thrive, safe in the knowledge that problems can be handled and risks carefully managed. Every day, our members pay out £155 million in benefits to pensioners and long-term savers as well as £58 million in general insurance claims.

3. An ISDN line is available for broadcasts.

4. More news and information from the ABI is available on our web site, www.abi.org.uk.